SII|p  (Eommonm^altlf  of  iHas0arI;uaptts 


\ : BUREAU  OF  STATISTICS 


Statk  House,  Boston,  Dec.  26,  1913. 


The  Act  Relative  to  Municipal  Indebtedness  in  Effect 

January  1 , 1914. 


To  City  and  Town  Financial  Officers,  Members  of  City  Governments,  Boards  of  Selectmen,  and 
Others  Whom  It  May  Concern : — 

Your  attention  is  herewith  called  to  the  fact  that  on  and  after  January  1,  1914,  the 
new  law  relative  to  Municipal  Indebtedness,  Chapter  719,  Acts  of  1913,  becomes  fully  effective, 
and  that  it  changes  and  modifies  in  many  important  respects  the  statutes  hitherto  in  force 
governing  the  purposes  and  periods  for  which  the  cities  and  towns  of  the  Commonwealth 
may  issue  loans  and  the  manner  of  providing  for  the  payment  of  debt  at  maturity.  The 
complete  text  of  this  and  other  legislation  affecting  municipal  finances  will  be  furnished  on 
application,  but  it  is  especially  important  that  city  and  town  officers  and  intending  pur- 
chasers of  municipal  securities  take  note  of  the  following  provisions:  — 

1.  Borrowing  in  Anticipation  of  Revenue. 

“ Cities  and  towns,  and  fire,  water  and  watch  districts,  so-called,  may,  by  a 
majority  vote,  incur  debt  for  temporary  loans  in  anticipation  of  the  revenue  of  the  financial 
year  in  which  the  debt  is  incurred  and  expressly  made  payable  therefrom  by  such  vote, 
and  may  issue  a note  or  notes  therefor  to  an  amount  not  exceeding  in  the  aggregate 
the  total  tax  levy  of  the  preceding  financial  year,  together  with  the  bank,  corporation 
and  street  railway  tax  received  during  the  preceding  financial  year,  exclusive  of  special 
or  additional  assessments  or  revenue  from  any  other  source  except  payments  made  by 
the  commonwealth  in  lieu  of  taxes  on  account  of  property  taken  for  institutions  or  for 
metropolitan  district  purposes.  Such  notes  shall  be  payable,  and  shall  be  paid,  not 


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later  than  one  year  from  the  date  thereof,  and  shall  not  be  renewed  or  paid  by  the  issue 
of  new  notes,  except  as  is  provided  in  section  nine.”  [Sec.  3,  Ch.  719,  Acts  of  1913.] 
It  will  be  noted  in  this  connection  that:  — 

(a)  The  old  phrase  authorizing  borrowing  “in  anticipation  of  taxes”  is  no 
longer  employed,  the  word  revenue  being  substituted  in  place  of  the  word  taxes-,  also 
the  words  financial  year  have  been  substituted  for  the  words  municipal  year.  In 
framing  an  article  for  a warrant  and  in  passing  the  votes,  therefore,  the  words 
revenue  and  financial  should  be  used.  The  following  forms  for  the  article  and  vote, 
respectively,  are  suggested  for  this  purpose:  — 

Article  . To  see  if  the  town  will  vote  to  authorize  the  treasurer,  ivith  the 
approval  of  the  selectmen,  to  borroio  money  in  anticipation  of  the  revenue  of  the 
current  financial  year. 

Voted,  That  the  town  treasxirer,  ivith  the  approval  of  the  selectmen,  be  and 
hereby  is  authorized  to  borrow  money  from  time  to  time  in  anticipation  of  the  revenue 
of  the  financial  year  beginning  , and  to  issue 

a note  or  notes  therefor,  payable  within  one  year,  any  debt  or  debts  incurred  under 
this  vote  to  be  paid  from  the  revenue  of  said  financial  year. 

(b)  A limit  upon  the  amount  that  may  be  borrowed  in  anticipation  of  revenue 
is  definitely  fixed.  Formerly  the  limit,  while  not  specifically  mentioned  in  the  law, 
was  assumed  to  be  the  amount  of  the  current  year’s  tax  levy.  Under  the  new  law 
the  amount  that  may  be  borroived  in  anticipation  of  revenue  in  any  one  year  cannot 
exceed  the  total  tax  levy  of  the  preceding  financial  year,  plus  the  bank,  corporation, 
and  street  railway  tax  for  said  year,  exclusive  of  special  or  additional  assessments, 
etc.  The  method  of  ascertaining  the  outside  amount  that  may  be  borrowed  in 
anticipation  of  revenue  is  simple.  For  example:  — 

Amount  of  tax  levy  based  upon  the  April  assessment  of  the  preceding 

year, S40,000 

Received  from  the  Commonwealth  during  the  preceding  financial  year 

on  account  of  bank,  corporation,  and  street  railway  taxes,  . . 3,500 

Received  from  the  Commonwealth  during  the  preceding  financial  year 
in  lieu  of  taxes  on  property  taken  by  it  for  institutions  or  metro- 
politan district  purposes, 200 

Amount  that  may  be  borrowed  in  anticipation  of  tlie  current  year’s  revenue,  143,700 

(c)  Notes  issued  in  anticipation  of  revenue  must  not  only  be  made  “i)ayable” 
by  the  terms  of  the  vote  and  the  note  itself  within  one  year  from  the  date  of  issue, 
but  they  must  actually  be  paid  within  one  year.  If  they  are  made  to  rnn  for  the 
full  year  permitted  by  the  law,  they  cannot  be  renewed  or  paid  by  the  issue  of 
new  notes,  and  as  no  obligations  represented  by  a note  can,  under  the  ])rovislons 


®l)p  Olnmmmtutpaltlf  nf  USaHsarl^uHPtta 


BUREAU  OF  STATISTICS 


Notice  to  Town  Treasurers,  Selectmen,  and  other  Municipal 

Officers. 

AFTER  JANUARY  1,  1914,  the  cities  and  towns  of  Massachusetts  cannot  incur  debt  for  many  pur- 
poses nor  perform  numerous  otlier  acts  in  connection  with  the  management  of  their  finances,  formerly 
sanctioned  by  law.  The  enclosed  circular  calls  attention  to  some  of  the  more  important  provisions  of  the  new 
law  and  your  careful  reading  of  the  same  is  earnestly  urged.  It  is  of  the  utmost  importance  that  all  finan- 
cial officers  familiarize  themselves  with  the  new  legislation,  and  especially  that  town  treasurers  and 
selectmen  should  do  so  prior  to  the  approaching  annual  town  meetings,  in  order  that  votes  authorizing  the 
borrowing  of  money  may  be  passed  in  proper  form  and  that  special  town  meetings,  or  other  subsequent 
embarrassments  because  of  failure  to  comply  with  the  statute,  be  avoided.  Wherever  doubt  exists  as  to 
whether  debt  may  be  incurred  for  any  particular  purpose  or  as  to  the  form  of  vote  to  be  passed  in  order 
that  money  may  be  borrowed,  this  office,  if  communicated  with  in  advance,  will  be  glad  to  render  all  the 
assistance  possible  in  suggesting  proper  methods  of  procedure. 

BEGINNING  JANUARY  1,  1914,  the  fee  for  certifying  town  notes  will  be  reduced  from  $3  to  $2  for 
each  note.  After  that  date  also  the  Bureau  of  Statistics  will  be  able  to  furnish  interest-coupon  notes,  at  the 
cost  of  printing  the  coupons  in  addition  to  the  certification  fee,  to  towns  desiring  this  form  of  security  in 
connection  with  serial  loans. 

BEGINNING  JANUARY  1,  1914,  all  notes  of  Fire,  Water,  Watch,  Light,  and  Improvement  Districts 
must  be  issued  on  forms  supplied  by  this  department  and  must  be  certified,  as  in  the  case  of  town  notes. 

Under  date  of  July  15  last  there  was  sent  from  this  office  to  the  chairman  of  every  board  of  selectmen, 
and  to  every  town  treasurer  in  the  Commonwealth,  and  to  various  other  municipal  officials,  a bulletin  em- 
bodying the  text  of  the  new  legislation  relating  to  city  and  town  finances  passed  by  the  General  Court  at  its 
last  session.  If  you  did  not  receive  this  bulletin  or  have  mislaid  the  same,  we  shall  be  glad  to  supply  you  with 
another  copy  on  application. 

DURING  THE  YEAR  1914  provision  must  be  made,  in  accordance  with  the  provisions  of  Chapter  634 
of  the  Acts  of  1913,  for  the  payment  of  all  outstanding  demand  notes  and  for  the  restoration  of  aU  trust  funds 
which  have  been  expended  for  general  city  or  town  expenses. 

THE  FINANCIAL  YEAR  OF  ALL  TOWNS  MUST  CLOSE  ON  DECEMBER  31  in  the  year  1914, 
and  thereafter  on  December  31  of  each  year,  in  accordance  with  the  provisions  of  Chapter  692  of  the  Acts  of 
1913,  which  also  provides  for  the  manner  of  financing  the  period  between  the  close  of  the  fiscal  year  and  the 
annual  town  meeting. 

THE  WARRANT  FOR  THE  ANNUAL  MEETING  IN  THE  YEAR  1914  of  every  town  in  the  Com- 
monwealth must,  by  the  provisions  of  Chapter  706  of  the  Acts  of  1913,  contain  an  article  (unless  such  article 
has  already  been  adopted)  reading  substantially  as  follows:  To  see  if  the  town  will  petition  the  Director  of  the 
Bureau  of  Statistics  for  an  audit  of  its  accounts,  in  accordance  with  the  provisions  of  Chapter  598  of  the  Acts 
of  1910  and  amendments  thereto. 

CHARLES  F.  GETTEMY, 
Director. 

State  House,  Boston,  December  26,  1913. 


Important 


Digitized  by  the  Internet  Archive 
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of  the  town  note  eertifieation  act,  be  extended  exceyt  by  the  issue  of  a new  note, 
it  follows  that  the  Director  of  the  Bureau  of  Statistics  cannot  certify  notes  made 
for  the  purpose  of  extending  the  debt  beyond  the  period  fixed  by  law.  But  when 
a note  is  issued  in  antieiixition  of  revenue  for  a period  of  less  than  one  year,  another 
note  may  be  issued  for  the  remaining  ])criod  of  the  year,  as  provided  for  in  Section 
9 of  the  law.  While  municipalities  ought  not  to  exhaust  their  borrowing  power  for 
revenue  purposes  on  one  loan  negotiated  for  the  full  year  period  authorized  by  the 
statute,  nor  in  general  incur  temj)orary  debts  for  a longer  period  than  necessary, 
it  is  also  bad  practice,  in  the  oi)inion  of  this  department,  to  issue  revenue  notes, 
with  a view  to  saving  interest,  for  such  short  periods  that  they  are  likely  to  mature 
before  there  is  revenue  on  hand  to  meet  them. 

2.  Temporary  Loans  for  Purposes  Other  Than  Ordinary  Revenue. 

“Cities  and  towns  may,  by  a majority  vote,  incur  debt  for  temporary  loans  for 
the  payment  of  any  land  damages  or  any  proportion  of  the  general  expenses  of 
altering  a grade  crossing  which  they  are  required  primarily  to  pay  under  the  provisions 
of  law,  or  any  proportion  of  the  expense  of  constructing  a highway  in  anticipation  of 
reimbursement  by  the  commonwealth,  such  reimbursement  first  to  have  been  agreed 
upon  by  the  Massachusetts  Highway  Commission,  and  may  issue  a note  or  notes  therefor 
and  for  a period  not  exceeding  one  year  from  the  date  thereof;  and  when  any  money  so 
paid  is  repaid  to  the  municipality,  it  shall  be  applied  to  the  discharge  of  the  loan.  Notes 
issued  under  the  provisions  of  this  section  shall  not  be  renewed  or  paid  by  the  issue  of 
new  notes,  except  as  is  provided  in  section  nine.”  [Sec.  4,  Ch.  719,  Acts  of  1913.] 

“If  a city  or  town  votes  to  issue  bonds,  notes  or  certificates  of  indebtedness  in 
accordance  with  the  provisions  of  law,  the  officers  authorized  to  issue  the  same  may,  in 
the  name  of  such  city  or  town,  make  a temporary  loan  for  a period  of  not  more  than 
one  year  in  anticipation  of  the  money  to  be  derived  from  the  sale  of  such  bonds,  notes  or 
certificates  of  indebtedness  and  may  issue  notes  therefor;  but  the  time  within  which  such 
securities  shall  become  due  and  payable  shall  not  be  extended  by  reason  of  the  making  of 
such  temporary  loan  beyond  the  time  fixed  in  the  vote  authorizing  the  issue  of  such 
bonds,  notes  or  certificates  of  indebtedness;  and  notes  issued  under  the  provisions  of  this 
section  and  of  sections  three  and  four  of  this  act  for  a shorter  period  than  one  year  may 
be  refunded  by  the  issue  of  other  notes  maturing  within  the  required  period.”  [Sec.  9, 
Ch.  719,  Acts  of  1913.] 

3.  Purposes  and  Periods  for  which  Debt  may  be  Incurred. 

Municipal  debts  are  of  two  kinds,  — those  which  may  be  incurred  within  the 
debt  limit,  so-called,  and  those  which  may  be  incurred  outside  the  debt  limit. 


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(a)  Debts  may  he  authorized  within  the  debt  limit  only  by  a vote  of  two-thirds 
of  the  voters  present  and  voting  at  a town  meeting  duly  called,  or  of  two-thirds 
of  all  the  members  of  a city  council  or  other  governing  body  taken  by  yeas  and 
nays,  and  subject  to  the  approval  of  the  mayor,  if  such  approval  is  required  by 
the  charter  of  the  city.  Such  debts  may  be  incurred  for  the  following  purposes  only 
and  must  be  payable  within  the  periods  specified : — 

(1)  For  the  construction  of  sewers  for  sanitary  and  surface  drainage 
purposes  and  for  sewage  disposal,  thirty  years. 

(2)  For  acquiring  land  for  public  parks  under  the  provisions  of  chapter 
twenty-eight  of  the  Revised  Laws  and  amendments  thereof,  thirty  years. 

(3)  For  acquiring  land  for,  and  the  construction  of,  schoolhouses  or 
buildings  to  be  used  for  any  municipal  or  departmental  purpose,  including  the 
cost  of  original  equipment  and  furnishing,  twenty  years. 

(4)  For  the  construction  of  additions  to  schoolhouses  or  buildings  to 
be  used  for  any  municipal  purpose,  including  the  cost  of  original  equipment 
and  furnishings,  where  such  additions  increase  the  floor  space  of  said  buildings 
to  which  such  additions  are  made,  twenty  years. 

(5)  For  the  construction  of  bridges  of  stone  or  concrete,  or  of  iron  super- 
structure, twenty  years. 

(6)  For  the  original  construction  of  streets  or  highways  or  the  exten- 
sion or  widening  of  streets  or  highways,  including  land  damages  and  the  cost 
of  pavement  and  sidewalks  laid  at  the  time  of  said  construction,  ten  years. 

(7)  ’ For  the  construction  of  stone,  block,  brick  or  other  permanent 
pavement  of  similar  lasting  character,  ten  years. 

(8)  For  macadam  pavement  under  specifications  approved  by  the  Massa- 
chusetts Highway  Commission,  five  years. 

(9)  For  the  construction  of  walls  or  dikes  for  the  protection  of  high- 
ways or  property,  ten  years. 

(10)  For  the  purchase  of  land  for  cemetery  purposes,  ten  years. 

(11)  For  such  part  of  the  cost  of  additional  departmental  equipment 
as  is  in  excess  of  twenty-five  cents  per  one  thousand  dollars  of  the  preceding 
year’s  valuation,  five  years. 

(12)  For  the  construction  of  sidewalks  of  brick,  stone,  concrete  or  other 
material  of  similar  lasting  character,  five  years. 

(13)  For  connecting  dwellings  or  other  buildings  with  public  sewers,  when 
a portion  of  the  cost  is  to  be  assessed  on  the  abutting  property  owners,  five  years. 

(14)  For  the  abatement  of  nuisances  in  order  to  conserve  the  public 
health,  five  years. 

(15)  For  extreme  emergency  appropriations  involving  the  health  or  safety 
of  the  people  or  their  property,  five  years. 


(h)  Debts  nmy  be  authorized  oiiLiide  the  debt  limil  only  l>y  a two-tliirds  vote 
of  the  voters  present  and  voting  at  a town  meeting  or  of  two-thirds  of  all  the  mem- 
bers of  a eity  eonneil  or  other  governing  body  and  subject  to  the  approval  of  the 
mayor  if  such  api)roval  is  required  by  the  charter  of  the  eity,  — except  that  for 
temporary  loans  a majority  vote  only  is  necessary.  Such  debts  may  be  incurred  for 
the  following  purposes,  payable  within  the  periods  specified;  — 

(1)  For  temporary  loans  (i.e.,  in  anticipation  of  revenue,  on  account 
of  altering  grade  crossings,  reimbursements  on  account  of  constructing  state 
highways,  or  in  anticipation  of  bond  or  note  issues),  one  year. 

(2)  For  establishing  or  purchasing  a system  for  supplying  the  inhabitants 
of  a city  or  town  with  water,  or  for  the  purchase  of  land  for  the  protection  of 
a water  system,  or  for  acquiring  water  rights,  thirty  years. 

(3)  For  the  extension  of  water  mains  and  for  water  departmental  equip- 
ment, five  years. 

(4)  For  establishing,  purchasing,  extending  or  enlarging  a gas  or  electric 
lighting  plant  within  the  limits  of  a city  or  town,  twenty  years;  but  the  in- 
debtedness so  incurred  shall  be  limited  to  an  amount  not  exceeding  in  a town 
five  per  cent  and  in  a city  two  and  one-half  per  cent  of  the  last  preceding 
assessed  valuation  of  such  town  or  city. 

(5)  For  acquiring  land  for  the  purposes  of  a public  playground,  as  speci- 
fied in  section  nineteen  of  chapter  twenty-eight  of  the  Revised  Laws  and  amend- 
ments thereof,  thirty  years;  but  the  indebtedness  so  incurred  shall  be  limited  to 
an  amount  not  exceeding  one-half  of  one  per  cent  of  the  last  preceding  assessed 
valuation  of  the  city  or  town. 

4.  How  the  Payment  of  Debt  Must  Be  Provided  For. 

The  further  establishment  of  sinking  funds  by  cities  or  towns  is  prohibited.  The 
issue  of  notes  for  any  purpose  payable  on  demand  is  prohibited.  Provision  must  be 
made  at  the  time  of  authorizing  any  debt  which  is  to  run  for  more  than  one  year  for 
paying  the  same  in  annual  instalments  “so  that  the  first  of  such  annual  payments  on 
account  of  any  loan  shall  be  made  not  later  than  one  year  after  the  date  of  the  bond 
or  notes  issued  therefor,  and  so  that  the  amount  of  such  annual  payments  in  any  year 
on  account  of  such  debts,  so  far  as  issued,  shall  not  be  less  than  the  amount  of  principal 
payable  in  any  subsequent  year,  and  such  annual  amount,  together  with  the  interest  on 
all  debts,  shall,  without  further  vote,  be  assessed  until  the  debt  is  extinguished.”  [Sec. 
14,  Ch.  719,  Acts  of  1913.]  “The  auditor  or  similar  officer  in  cities,  and  the  town  ac- 
countant in  towns  having  such  an  officer,  and  the  treasurer  in  all  other  towns  shall,  not 
later  than  May  first  of  each  year,  notify  the  board  of  assessors  in  writing  of  the  amount 
of  debt  falling  )due  during  the  current  financial  year,  the  sinking  fund  requirements,  if 
any,  and  what  provision  has  been  made  for  meeting  such  requirements;  and  the  board 


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sliall  make  such  provision  for  meeting  said  debt  and  sinking  fund  requirements  in  the 
tax  levy  of  that  year  as  in  its  judgment  may  be  necessary.”  [Sec.  8,  Ch.  719,  Acts  of 
1913.] 

5.  Liabilities  not  to  be  Incurred  in  Excess  of  Appropriations. 

“No  department  of  any  city  or  town  shall  incur  liability  in  excess  of  the  appro- 
priation made  for  the  use  of  such  department,  except  in  cases  of  extreme  emergency 
involving  the  health  or  safety  of  persons  or  property,  and  then  only  by  a vote  in  cities 
of  two-thirds  of  the  members  of  the  city  council,  and  in  a commission  form  of  govern- 
ment by  a vote  of  two-thirds  of  the  members  of  the  commission,  and  in  a town  by  a 
vote  of  two-thirds  of  the  selectmen.”  [Sec.  10,  Ch.  719,  Acts  of  1913.] 


A careful  study  of  the  above  provisions  and  general  familiarity  with  the  law  on  the 
part  of  the  selectmen  and  town  financial  officers  is  especially  urged  in  order  that  delay  in  the 
certification  of  town  notes  because  of  failure  to  comply  with  the  statute  may  be  avoided. 

CHARLES  F.  GETTEMY, 

Director,  Bureau  of  Statistics. 


W' 


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